[Federal Register: July 9, 2004 (Volume 69, Number 131)]
[Rules and Regulations]
[Page 41383-41385]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09jy04-2]
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DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. FV03-930-6 IFR]
Tart Cherries Grown in the States of Michigan, et al.; Additional
Option for Handler Diversion
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Interim final rule with request for comments.
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SUMMARY: This rule adds another method of handler diversion to the
regulations under the Federal tart cherry marketing order (order).
Handlers handling cherries harvested in a regulated district may
fulfill any restricted percentage requirement when volume regulation is
in effect by diverting cherries or cherry products rather than placing
them in an inventory reserve. Under this additional method, handlers
will be allowed to obtain diversion credit for diverting tart cherries,
after processing, that may not be acceptable for the finished products
manufactured by the handler. Currently, such diversion must take place
prior to processing. This action was unanimously recommended by the
Cherry Industry Administrative Board (Board), the body which locally
administers the marketing order. The marketing order regulates the
handling of tart cherries grown in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin.
DATES: Effective July 12, 2004; comments received by September 7, 2004,
will be considered prior to issuance of a final rule.
ADDRESSES: Interested persons are invited to submit written comments
concerning this action. Comments must be sent to the Docket Clerk,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; fax: (202) 720-8938, e-mail:
moabdocket.clerk@usda.gov, or Internet: http://www.regulations.gov. All
comments should reference the docket number and the date and page
number of this issue of the Federal Register and will be made available
for public inspection in the Office of the Docket Clerk during regular
business hours or can be viewed at: http://www.ams/usda.gov/fv/moab/html
.
FOR FURTHER INFORMATION CONTACT: Patricia A. Petrella or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, Suite 2A04, Unit 155, 4700 River Road, Riverdale,
MD 20737, telephone: (301) 734-5243, or Fax: (301) 734-5275; or George
Kelhart, Technical Advisor, Marketing Order Administration Branch,
Fruit and Vegetable Programs, AMS, USDA, 1400 Independence Avenue, SW.,
STOP 0237, Washington, DC 20250-0237; telephone: (202) 720-2491, or
fax: (202) 720-8938.
Small businesses may request information on complying with this
regulation, or obtain a guide on complying with fruit, vegetable, and
specialty crop marketing agreements and orders by contacting Jay
Guerber, Marketing Order Administration Branch, Fruit and Vegetable
Programs, AMS, USDA, 1400 Independence Avenue, SW., STOP 0237,
Washington, DC 20250-0237; telephone: (202) 720-2491, fax: (202) 720-
5698, or e-mail: Jay.Guerber@usda.gov.
SUPPLEMENTARY INFORMATION: This rule is issued under Marketing
Agreement and Order No. 930 (7 CFR part 930), regulating the handling
of tart cherries produced in the States of Michigan, New York,
Pennsylvania, Oregon, Utah, Washington, and Wisconsin, hereinafter
referred to as the ``order.'' The order is effective under the
Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-
674), hereinafter referred to as the ``Act.''
The Department of Agriculture (USDA) is issuing this rule in
conformance with Executive Order 12866.
This rule has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule will not preempt any State or local laws,
regulations, or policies, unless they present an irreconcilable
conflict with this rule.
The Act provides that administrative proceedings must be exhausted
before parties may file suit in court. Under section 608c(15)(A) of the
Act, any handler subject to an order may file with the Secretary a
petition stating that the order, any provision of the order, or any
obligation imposed in connection with the order is not in accordance
with law and request a modification of the order or to be exempt
therefrom. Such handler is afforded the opportunity for a hearing on
the petition. After the hearing, the Secretary would rule on the
petition. The Act provides that the district court of the United States
in any district in which the handler is an inhabitant, or has his or
her principal place of business, has jurisdiction in equity to review
the Secretary's ruling on the petition, provided an action is filed not
later than 20 days after the date of the entry of the ruling.
Handler diversion is authorized under Sec. 930.59 of the order
and, when volume regulation is in effect, handlers may fulfill
restricted percentage requirements by diverting cherries or cherry
products into authorized outlets. Volume regulation is intended to help
the tart cherry industry stabilize supplies and prices in years of
excess production. The volume regulation provisions of the order
provide for a combination of processor owned inventory reserves and
grower or handler diversion of excess tart cherries. Reserve cherries
may be released for sale into commercial outlets when the free
percentage portion of the regulated crop is not expected to fill
demand.
Section 930.59(b) of the order provides for the designation of
allowable forms of handler diversion. These include: uses exempt under
Sec. 930.62; contribution to a Board approved food bank or other
approved charitable organization; acquisition of grower diversion
certificates that have been issued in accordance with Sec. 930.58; or
other uses, including diversion by destruction of the cherries at the
handler's facilities as provided for in Sec. 930.59(c).
Section 930.159 of the rules and regulations under the order allows
handlers to divert cherries by destruction of the cherries at the
handler's facility. Currently, at-plant diversion of cherries takes
place at the handler's facility prior to placing
[[Page 41384]]
cherries into the processing line. However, experience has shown that
this limitation places a burden on handlers regulated under this order.
To remove this burden, the Board unanimously recommended that
handlers be allowed to divert and receive diversion credit for tart
cherries after processing that may not be acceptable for the finished
products they manufacture. With the capability to divert such cherries
after processing, but before the finished product is completed,
handlers would have an incentive to remove the lower quality processed
cherries from the lot, meet their restricted obligation requirements,
and improve the quality of their products. Improvement in the quality
of tart cherries and tart cherry products would benefit producers,
handlers, and consumers.
This action is intended to provide handlers more flexibility in
meeting their restricted obligation requirements. The ability to
perform at-plant diversion after placing the cherries into the
processing line, but before a finished product is completed, will
benefit all handlers. This action is expected to especially benefit
handlers who only process one product. In many instances, these
handlers are small.
This rule would allow a handler who processes only five plus one
cherries (25 pounds of tart cherries with 5 pounds of sugar added) to
fulfill his/her restricted percentage obligation (in a volume regulated
year) by diverting at-plant, lower quality wholesome fruit from his/her
five plus one processing line. Currently, the diversion must take place
prior to processing and handlers that process one product may be forced
to divert their good quality tart cherries with the lower quality
wholesome cherries, or divert cherries by some other approved method.
Handlers processing more than one product also would be able to take
advantage of the additional method of at-plant diversion.
Diversion may also be accomplished by handlers donating cherries to
charitable organizations, utilizing cherries in exempt outlets, or
redeeming grower diversion certificates obtained from growers who have
diverted cherries by non-harvest, and who have been issued diversion
certificates by the Board in accordance with rules and regulations
governing the issuance of grower diversion certificates (Sec.
930.158).
The Board reported that during the 2001-2002 crop year that the
inventory reserve contained 44.3 percent frozen products, 11.3 percent
waterpack, 15.2 percent piefill, 28 percent juice and juice
concentrate, and 1.2 percent other products. These percentages show
that frozen products, and juice and juice concentrate make up most of
the reserve quantities.
Pursuant to Sec. 930.159(b), handlers electing to divert cherries
or cherry products must first notify the Board and submit a plan for
approval. Such notification and plan must include an agreement that
diversion will take place under the supervision of the USDA Processed
Products Inspection Service or Board employee inspectors, and that the
costs of such supervision are to be paid by the handler. USDA
inspectors supervise the diversion of cherries or finished products at
the current hourly rate under USDA's inspection fee schedule (7 CFR
54.42). Board employees supervise diversion at the same payment rate.
Once diversion is satisfactorily accomplished, handlers receive
diversion certificates stating the weight of cherries diverted. Such
diversion certificates can be used to satisfy handlers' restricted
percentage obligations. Cherries and finished cherry products which
have been diverted are not be subject to assessments.
The Regulatory Flexibility Act and Effects on Small Businesses
The Agricultural Marketing Service (AMS) has considered the
economic impact of this action on small entities and has prepared this
initial regulatory flexibility analysis. The Regulatory Flexibility Act
(RFA) would allow AMS to certify that regulations do not have a
significant economic impact on a substantial number of small entities.
However, as a matter of general policy, AMS' Fruit and Vegetable
Programs (Programs) no longer opt for such certification, but rather
perform regulatory flexibility analyses for any rulemaking that would
generate the interest of a significant number of small entities.
Performing such analyses shifts the Programs' efforts from determining
whether regulatory flexibility analyses are required to the
consideration of regulatory options and economic or regulatory impacts.
The purpose of the RFA is to fit regulatory actions to the scale of
business subject to such actions in order that small businesses will
not be unduly or disproportionately burdened. Marketing orders issued
pursuant to the Act, and rules issued thereunder, are unique in that
they are brought about through group action of essentially small
entities acting on their own behalf. Thus, both statutes have small
entity orientation and compatibility.
There are approximately 40 handlers of tart cherries who are
subject to regulation under the tart cherry marketing order and
approximately 900 producers of tart cherries in the regulated area.
Small agricultural service firms, which includes handlers, have been
defined by the Small Business Administration (13 CFR 121.201) as those
having annual receipts of less than $5,000,000, and small agricultural
producers are defined as those having annual receipts of less than
$750,000. A majority of the producers and handlers are considered small
entities under SBA's standards.
Board and subcommittee meetings are widely publicized in advance
and are held in a location central to the production area. The meetings
are open to all industry members (including small business entities)
and other interested persons who are encouraged to participate in the
deliberations and voice their opinions on topics under discussion.
Thus, Board recommendations can be considered to represent the
interests of small business entities in the industry.
The Board reported that during the 2001-2002 crop year that the
inventory reserve contained 44.3 percent frozen products, 11.3 percent
waterpack, 15.2 percent piefill, 28 percent juice and juice
concentrate, and 1.2 percent other products. These percentages show
that frozen products, and juice and juice concentrate make up most of
the reserve quantities.
The Board unanimously recommended this additional method for
diversion credit to allow handlers to divert product after processing
that may not be acceptable for the finished products manufactured by
the handler. As discussed earlier, this action provides handlers more
flexibility in meeting their restricted obligation requirements and is
expected to be particularly helpful to handlers who produce only one
product. In many instances, the one product handlers in the tart cherry
industry are small.
Handlers that process juice concentrate and other products can more
easily meet their restricted obligation requirements by juicing and
processing lower quality wholesome product and placing it in the
inventory reserve. Handlers that only have the ability to process
products requiring higher quality fruit, like five plus one cherries
have to put this fruit into the inventory reserves, or take advantage
of other diversion options available under the order.
To sell more of their higher quality products, some handlers
purchase cherries or diversion credit certificates from other handlers
to meet their restricted obligation requirements. The
[[Page 41385]]
added flexibility provided by this action will help all handlers, and
is expected to especially benefit the one-product handlers who will be
able to sell more of their higher quality cherries in finished product
form.
Producers also are expected to benefit from the implementation of
this action. Currently, producers can use in-orchard tank diversion, in
which cherries harvested into tanks are measured, calculated then
diverted in the orchard. This method of diversion, however, removes
both good and lesser quality fruit. Under the Board's recommendation,
producers could deliver all of their fruit to handlers and the good
quality fruit would be sorted and the poor quality fruit diverted or
dumped. Producers would be paid for the good quality fruit. According
to the Board, growers are paid on a quality point basis relative to the
quality of the fruit delivered. This action would provide producers
with more consistent income proportionate to the quality of the fruit
delivered to handlers and with discretion to reduce orchard diversion.
As such, producers can be more selective in complying with the grower
diversion process.
The principal demand for tart cherries is in the form of processed
products. Tart cherries are dried, frozen, canned, juiced, and pureed.
Data from the National Agricultural Statistics Service (NASS) states
that during the period 1995/96 through 2002/03, approximately 92
percent of the U.S. tart cherry crop, or 285.7 million pounds, was
processed annually. Of the 285.7 million pounds of tart cherries
processed, 58 percent was frozen, 30 percent was canned, and 12 percent
was utilized for juice.
With regard to alternatives, the Board felt that the recommendation
was the only solution to providing handlers addtitional flexibility in
meeting their restricted obligation requirements.
USDA has not identified any relevant Federal rules that duplicate,
overlap, or conflict with this regulation.
In compliance with Office of Management and Budget (OMB)
regulations (5 CFR part 1320) which implement the Paperwork Reduction
Act of 1995 (Pub. L. 104-13), the information collection and
recordkeeping requirements have been previously approved by OMB and
assigned OMB Number 0581-0177.
There are some reporting, recordkeeping, and other compliance
requirements under the marketing order. The reporting and recordkeeping
burdens are necessary for compliance purposes and for developing
statistical data for maintenance of the program. The forms require
information which is readily available from handler records and which
can be provided without data processing equipment or trained
statistical staff. As with other, similar marketing order programs,
reports and forms are periodically studied to reduce or eliminate
duplicate information collection burdens by industry and public sector
agencies. This rule does not change those requirements.
This rule invites comments on adding another method of handler
diversion to the regulations under the Federal tart cherry marketing
order. Any comments received will be considered prior to finalization
of this rule.
After consideration of all relevant material presented, including
the Board's recommendation, and other information, it is found that
this interim final rule, as hereinafter set forth, will tend to
effectuate the declared policy of the Act.
Pursuant to 5 U.S.C. 553, it is also found and determined upon good
cause that it is impracticable, unnecessary, and contrary to the public
interest to give preliminary notice prior to putting this rule into
effect and that good cause exists for not postponing the effective date
of this rule until 30 days after publication in the Federal Register
because: (1) The tart cherry crop year begins July 1 and this action
needs to be implemented so handlers can take advantage of this
opportunity for the upcoming season; (2) the Board unanimously
recommended this action at a public meeting and interested parties had
an opportunity to provide input; and (3) this rule provides a 60-day
comment period and any comments received will be considered prior to
finalization of this rule.
List of Subjects in 7 CFR Part 930
Marketing agreements, Reporting and recordkeeping requirements,
Tart cherries.
0
For the reasons set forth in the preamble, 7 CFR part 930 is amended to
read as follows:
PART 930--TART CHERRIES GROWN IN THE STATES OF MICHIGAN, NEW YORK,
PENNSYLVANIA, OREGON, UTAH, WASHINGTON, AND WISCONSIN
0
1. The authority citation for 7 CFR part 930 continues to read as
follows:
Authority: 7 U.S.C. 601-674.
0
2. Section 930.159 is amended by revising paragraph (c) to read as
follows:
Sec. 930.159 Handler diversion.
* * * * *
(c) At-plant diversion. Diversion by disposal at-plant may take
place prior to placing the cherries into the processing line, or after
processing, but before a finished product is manufactured. Such
diversion will take place under the supervision of USDA Inspection
Service or Board employee inspectors. USDA inspectors or Board
employees or Board agents will supervise diversion of cherry products
at-plant at the current hourly rate under USDA's inspection fee
schedule (7 CFR 52.42).
* * * * *
Dated: July 1, 2004.
A.J. Yates,
Administrator, Agricultural Marketing Service.
[FR Doc. 04-15584 Filed 7-8-04; 8:45 am]
BILLING CODE 3410-02-P